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Corporate Tax Evasion

Volume 563: debated on Tuesday 14 May 2013

Q9. What plans the Government have to use the UK’s presidency of the G8 to tackle corporate tax evasion. (153856)

Q10. What plans the Government have to use the UK’s presidency of the G8 to tackle corporate tax evasion. (153857)

Tax evasion and tax avoidance undermine public revenues and the public’s confidence in the fairness and effectiveness of our tax system. The UK is pursuing action on both fronts through the presidency of the G8. We are promoting the development of new global standards on automatic information exchange and increased transparency of company ownership in order to better tackle tax evasion. We are seeking strong endorsement through the G8 of the importance of the work of the G20 and the OECD on tackling avoidance by multinationals.

I thank the Minister for his reply. Does he think that it is now time to take a second look at the USA’s experience and its Foreign Account Tax Compliance Act to tackle the question of international tax avoidance?

My right hon. Friend makes an important point; indeed, we are doing that. We have signed an agreement with the US to implement FATCA as the new standard in tax transparency, and we are promoting that type of information around the world. We have reached agreements with the overseas territories and the Crown dependencies, while France, Germany, Italy, Spain and the UK have all agreed to exchange information based on the FATCA standard. That is very much the approach that we are taking in the G7, G8 and G20, and we have made remarkable progress so far.

Does the Minister recognise that, as well as capacity building in their domestic authorities, developing countries need better access to international tax information? Can that be part of the negotiations with the G8?

My hon. Friend makes an important point. It is important that we have better information that we can provide to developing countries. Whether we do that by exchanging information along the FATCA lines or by encouraging better global reporting to tax authorities by multinational companies, that information will prove very helpful for both developed and developing countries.

The Minister will be aware that some employers are increasingly using payroll companies and umbrella companies to avoid paying tax and national insurance. What can the Government do to address that tendency?

We are taking measures to address this: the hon. Gentleman will be aware of the action that we took in the last Budget to close the loophole relating to offshore companies. We of course want a tax system that ensures that the tax is consistent with the economic reality, and that is what we intend to have.

Do the Government believe that cutting £2 billion from HMRC’s budget will help or hinder its ability properly to address tax evasion and tax avoidance in this country?

This is the Government who have found £1 billion to support HMRC in dealing with tax evasion and tax avoidance. This is the Government who have provided resources in that area. Yes, we can find efficiency savings in HMRC—just as the previous Government did, to be fair—but we are putting more into those parts of HMRC that get the money in. We are making dramatic progress, with HMRC’s yield hitting record levels.